Pages

Thursday, October 25, 2012

Why Romney can't save the Sensata workers

Sorry, but Mitt Romney won't save the Freeport jobs

FORTUNE -- As Occupy Wall Street celebrated its one-year anniversary
yesterday in Zuccotti Park, a much smaller group of protesters set up
camp in the northwestern Illinois town of Freeport. They called it
called BainVille, in sarcastic homage to the private equity firm they
blame for outsourcing their jobs to China.
What the protesters want is for Mitt Romney to intervene on their
behalf, leveraging both his national profile and his relationship with
Bain Capital executives. And, in theory, it makes sense. After all, what
presidential candidate wouldn't want to help save 170 American
manufacturing jobs? Particularly someone who talks about getting tough
with China?
But it simply isn't going to happen.
For the uninitiated, here's a quick backgrounder: Late last year, a Bain-owned company called Sensata Technologies (ST) agreed to buy an auto-sensor manufacturing unit from Honeywell (HON).
From the outset, Sensata said that it planned to move the jobs overseas
at year-end 2012, since the majority of its auto-sensor business is in
Asia. In fact, Sensdata didn't even buy the manufacturing facility from
Honeywell. It leased it, with Honeywell expected to hang a for-sale sign
when Sensata moves out in a few months.
To be sure, this is a horrible situation for the Sensata employees –
the vast majority of whom have not yet found other employment (Honeywell
hired just a small number of folks to work in its other Freeport
facilities). After all, Sensata has never suggested that the plant was
unprofitable. It simply thinks the effort would be more profitable elsewhere.
Unfortunately, the workers are barking up the wrong tree with Romney.
Remember, this is the guy whose campaign got into a well-publicized
scuffle over whether he really stopped making decisions for Bain Capital
in 1999 or 2002 (for the record, it was 1999).
How could he possibly open himself up to legitimate charges of
influencing Bain's behavior in 2012? Even if one argues it's the right
thing to do for the workers, it's not the politically feasible thing to
do (and, if anything, Romney tries to be a pragmatist in such matters).
Moreover, there is little guarantee that a Romney plea would even
save the jobs. Yes, he has friends and former colleagues on the Sensata
board, including chairman Paul Edgerley. But they have fiduciary
responsibilities to their own investors, and Sensata has made it clear
that the best financial move is to shutter Freeport. In addition, Bain
could have future fundraising trouble if Romney is elected president.
After all, who wants to invest in a private equity firm that seems to
make decisions based on a politician's best interests?
What the Sensata workers really should spend their time on is
pressuring state pension funds that invest with Bain (or which will be
asked to invest on Bain's new fund later this year). Make a broader
economic case about how keeping 170 Freeporters employed is better for
the state -- and, by extension, its public pensioners -- than is making a
few extra dollars on Sensata.
Kind of like the pressure applied by certain Permira shareholders a
few years back when it looked to shut down a Hugo Boss facility in Ohio.
After all, there is no reason why Sensata, if it wanted, couldn't
simply buy the Freeport building from Honeywell and keep it open.
Not saying such a strategy would have necessarily worked, but it would have been time better spent than hounding Romney…